Wall Street kicked off the year in rally mode, with the broad S&P 500 posting its best January since 1997. The first trading session of the new month was set to be a busy one, with a slew of big-name earnings and high-profile economic data on tap.

The Labor Department said U.S. nonfarm payrolls rose by 157,000 in January from December, slightly below the 160,000 expected. The unemployment rate ticked up to 7.9% from 7.8% the month prior. December's payroll increase was revised up to 196,000 from a previously reported 155,000, while November's was bumped up to 247,000 from 161,000.

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While the January figures were broadly inline with estimates, Todd Schoenberger, managing partner at LandColt Capital, said the backwards-looking upward revisions as well as futures for strong first-quarter jobs growth were keeping Wall Street's bullish sentiment going strong.

Chris Williamson, chief economist at market data company Markit, also noted that the January data provided "reassuring evidence that the U.S. is not falling back into recession," on the heels of an unexpected drop in fourth-quarter gross domestic product.

Among the other reports, were two from China, the world's second-biggest economy. An official government report on its manufacturing sector showed the pace of expansion there unexpectedly ticking lower in January. However, a private survey from HSBC actually showed the factory sector revving up at its fastest clip in two years.

"The mixed signals cast some doubt on the strength and sustainability of the recovery," Zhiwei Zhang, an economist at Nomura wrote to clients. However, Hongbin Qu, HSBC's chief economist for China, wrote in a statement that "we see increasing signals of a sustained growth recovery in the coming months," noting several positive factors there.

Meanwhile, the eurozone's factory sector contracted at its slowest pace in 11 months in January, suggesting the currency bloc continues bouncing back from the debt crisis. Germany, the biggest European economy, saw its slowest rate of contraction in 11 months. However, France, the second-biggest economy, saw its steepest contraction in four months.

A report on the U.S. manufacturing sector from the Institute for Supply Management is due out at 10:00 a.m. ET. The rate of expansion is expected to have slowed down very slightly in January.

Later in the morning, Wall Street will get a look at consumer sentiment. The Reuters/University of Michigan gauge is expected to have increased very slightly in late January from earlier in the month.

On the corporate front, Merck (MRK) revealed quarterly results that topped Wall Street's expectations, but the pharmaceutical giant's full-year outlook came at the low range of estimates. ExxonMobil (XOM), the world's biggest publicly-traded energy company, beat estimates on the bottom line,and saw its top line come essentially inline.

Oil futures were modestly lower. The benchmark U.S. contract dipped 35 cents, or 0.36%, to $97.13 a barrel. Wholesale New York Harbor gasoline slipped 0.3% to $3.023 a gallon. In metals, gold rose $3.50, or 0.21%, to $1,666 a troy ounce.

Foreign Markets

The Euro Stoxx 50 rose 0.06% to 11191, the English FTSE 100 gained 0.38% to 6300 and the German DAX advanced 0.21% to 7791.

In Asia, the Japanese Nikkei 225 edged up by 0.47% to 11191 and the Chinese Hang Seng slipped 0.03% to 23722.